## Facts

- Taxpayers Barry Friedberg and Charlotte Moss owned a Manhattan townhouse in a historic district.
- In 2003, they donated to a charity (1) a facade conservation easement and (2) associated development rights related to the townhouse.
- The taxpayers hired appraiser Michael Ehrmann, who prepared an appraisal using a before-and-after valuation approach and represented himself as qualified; the appraisal was attached to the 2003 return.
- The taxpayers claimed charitable contribution deductions based on Ehrmann’s valuation.
- In 2009, the IRS issued a notice of deficiency disallowing the deductions in whole or part; the taxpayers petitioned the Tax Court.
- On cross-motions for partial summary judgment, the Tax Court previously ruled that the facade-easement appraisal was not a “qualified appraisal” and denied that deduction on that ground, while finding factual disputes prevented summary judgment regarding the development-rights donation.
- After an intervening appellate decision changed the controlling standard for what constitutes a “qualified appraisal” in the relevant circuit, the taxpayers moved for reconsideration.
- In additional discovery, Ehrmann testified he had never previously appraised transferred development rights and that Friedberg knew this when retaining him.

## Issues

1. Whether, under the controlling appellate standard, the facade-easement appraisal satisfied the regulatory “qualified appraisal” requirements for charitable contribution deductions.
2. Whether the development-rights appraisal was prepared by a “qualified appraiser,” given the appraiser’s admitted lack of prior experience valuing transferred development rights, and whether the appraisal therefore met the qualified-appraisal regime.

## Decision

- The Tax Court granted the motion for reconsideration in part and denied it in part.
- The court held the facade-easement appraisal satisfied the “qualified appraisal” requirements because it identified a valuation method (before-and-after) and stated the basis for the valuation; disputes about reliability affected weight, not qualification.
- The court did not resolve the development-rights deduction on reconsideration, indicating the appraiser’s lack of experience raised serious concerns about whether he was a “qualified appraiser,” and left related factual and legal questions for trial.

## Legal Principles

- For charitable contribution deductions subject to the qualified-appraisal rules, an appraisal’s compliance turns on meeting specified informational and methodological disclosures (including identification of the valuation method and the basis for the valuation), not on whether the IRS accepts the method or conclusions.
- Challenges to the persuasiveness or correctness of an appraisal generally go to evidentiary weight and the merits of valuation, rather than to threshold “qualified appraisal” status.
- The Tax Court follows controlling precedent of the circuit to which an appeal is expected to lie when that precedent squarely addresses the issue.
- The “qualified appraiser” requirement can be fact-intensive and may require verifiable education and experience in valuing the specific type of property at issue; lack of specialized experience can jeopardize qualification, particularly for atypical property interests such as transferred development rights.

## Conclusion

The Tax Court revised its earlier summary-judgment treatment of the facade-easement donation, holding that the appraisal met the formal qualified-appraisal requirements under controlling appellate precedent, while reserving for trial whether the development-rights appraisal failed because the appraiser lacked demonstrable experience valuing that specific property type and whether the claimed valuation was substantiated.


Friedberg v. Commissioner, 106 T.C.M. (CCH) 360 (T.C. 2013)